TDS Rate in Nepal for FY 2083/84

Quick reference to Tax Deducted at Source under the Income Tax Act, 2058 (Sections 87, 88, 88Ka and 89). Shaded = Final TDS

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Employment income Section 87

Paid by a resident employer to a resident employee: TDS at slab rates.

First Rs. 10,00,000	Next Rs. 5,00,000	Next Rs. 10,00,000	Next Rs. 15,00,000	Balance
1% (SST)	10%	20%	27%	29%

The 1% SST does not apply to: (a) proprietorship firms (business income), (b) pension income, (c) a natural person participating in SSF.
Paid to a non-resident employee: 25%.

Interest Section 88

Rate	Payment
No TDS	Interest paid to resident BFIs; interest on loans between co-operative banks and co-operatives; interest exempt from tax; interest on deposits up to Rs. 25,000 paid by rural municipality-based microfinance, Rural Development Bank, Postal Savings Bank, or co-operatives with agro/forest-based income or operating in rural municipalities (if interest exceeds Rs. 25,000, TDS applies only on the excess) (amendment FY 2083/84).
5%	Interest on deposits of life insurance companies paid by resident BFIs; interest on foreign currency loans from foreign banks/FIs for reservoir/semi-reservoir hydro projects above 200MW completing financial closure by end of Chaitra 2082; interest paid by resident BFIs on foreign currency loans from foreign banks/FIs invested in NRB-prescribed areas.
6%	Final TDS, only if all conditions are met: paid to a natural person; paid by a resident bank, financial institution, co-operative, bond-issuing entity or listed company; on deposits, bonds, debentures or government bonds; not connected to the recipient's business.
15%	Interest paid to tax-exempt organizations (final TDS); to a natural person for business purposes; to entities.

Natural resource payments Section 88

15%	Payment for natural resources.

Rent Section 88

No TDS	House rent paid to a natural person, other than for conducting business (the payer pays Bahal Kar at the Ward).
1.5%	Carriage service and rent of transportation vehicles, or payment to a person in the vehicle-hiring business, where the recipient is VAT registered.
2.5%	Carriage service and rent of transportation vehicles where the recipient is not VAT registered.
10%	All other rental payments.

Royalty Section 88

No TDS	Payment for articles published in a newspaper.
1.5%	Payment to a resident person for literary articles or compositions.
15%	All other royalty payments (fees paid for affiliation to a university are treated as royalty).

Service fee Section 88

No TDS	Inter-regional exchange fee paid to the bank issuing credit cards. If a training venue is not in Nepal, the training is deemed provided outside Nepal, so no TDS on that payment.
1.5%	Services that are VAT exempt, or services paid to a VAT-registered party.
5%	Registration, education and exam fees paid to a foreign school or university.
15%	Final TDS: meeting fee up to NPR 20,000 per meeting; question setting and answer checking; part-time teaching or guest lectures.
15%	Meeting fee above NPR 20,000 per meeting; all other service fees.

Commission and sales bonus Section 88

No TDS	Incentives given to consumers who pay for goods/services through digital instruments (ATM, e-money/wallet, mobile banking).
5%	Payment by a resident employment agency to a non-resident person.
20%	Final TDS: service charges or commission paid to an insurance agent who is a resident natural person (amendment FY 2083/84).
15%	All other commission or sales bonus payments.

Dividend Section 88

5%	Paid by a resident company or partnership, on the gross amount (final TDS).

Investment insurance and mutual funds Section 88

5% of gain	Gains on investment insurance (final TDS).
5%	Gain paid by a mutual fund to a natural person (final TDS).
15%	Gain paid by a mutual fund to any entity other than a natural person.

Retirement payments Section 88

No TDS	PF, CIT, gratuity and accumulated payments relating to the period before 19.12.2058; medical expenses up to NPR 1,80,000 for employees employed before 19.12.2058, received after retirement.
5% of gain	Final TDS on payment by the Government of Nepal or a contribution-based approved retirement fund. Gain = gross payment, less payment accrued till 18.12.2058, less the higher of (a) NPR 5,00,000 or (b) 50% of the retirement payment liable to tax (Sec. 65(1)(b)).
5% of gain	Final TDS on payment by a contribution-based un-approved retirement fund. Gain = gross payment, less payment accrued till 18.12.2058, less retirement contribution paid by the person.
15%	Non-contributory retirement payments (final TDS).

Windfall gain Section 88Ka

No TDS	Awards up to Rs. 5 lakhs for contributions in literature, art, culture, sports, journalism, science, technology, agriculture or public administration; or national/international awards in those sectors published in the Nepal Gazette.
25%	Final TDS on awards above Rs. 5 lakhs not exempted by Nepal Gazette publication (TDS only on the excess amount) (amendment FY 2083/84); and on all other windfall gains.

Contract payments Section 89

No TDS	Payment to a resident person under a contract where the total of the previous 10 days' payments does not exceed NPR 50,000; work done through a consumer committee (amendment FY 2083/84).
1.5%	Final TDS: premium paid to a non-resident insurance company; commission on reinsurance premium accepted from non-resident insurance companies.
1.5%	Payment to a resident person under a contract where payments exceed Rs. 50,000 (total of the previous 10 days).
5%	Final TDS on payment to a non-resident person under a contract or agreement.

Payments treated as final TDS Section 92

The tax withheld is the recipient's final tax on: dividends paid by resident companies or partnerships; house/land rent paid to a natural person not running a business; gains on investment insurance; benefits from un-approved retirement funds; interest meeting the 6% conditions above; payments to non-residents under Sections 87, 88, 88Ka or 89; all retirement payments (except regular pension); meeting fees up to Rs. 20,000 per meeting, part-time teaching, and question setting or answer checking; windfall gains; mutual fund returns to natural persons; and commission paid to insurance agents.

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